I'm the publisher of Forbes magazine, where I write a biweekly column called Innovation Rules. I'm also a regular panelist on cable news' popular business show, Forbes on FOX (with an average viewership of 1.2 million households per show in 2012), and frequent guest analyst on CNBC's The Kudlow Report. My 2004 book, Life 2.0, was a Wall Street Journal business bestseller. I'm also an entrepreneur, an active angel investor, and sit on three outside boards. For co-founding Silicon Valley's largest public affairs organization, the 6,500-member Churchill Club, I'm a past Northern California winner of Ernst & Young's prestigious "Entrepreneur of the Year Award." I earned a B.A. from Stanford University. I lecture up to 50 to 60 times a year on the innovation economy.

7 Reasons Why Facebook IPO Was A Bust

1. Too late.Facebook‘s shares have been dead in the water for the last 12 months. Private investors had already bid up Facebook to a $100 billion value a year ago.

2. Mark Zuckerberg’s disdain for investors. He never wanted to be a public company. This became all too obvious during the IPO road show’s crucial stop in New York when (a) Zuck hid out in the bathroom and forced the audience to wait, and (b) he took the stage wearing his hoodie. Zuckerberg’s view of shareholders is like President Obama’s view of blue collar workers. He needs them but secretly laughs at them.

3. Facebook left nothing for the common investor. The insider pig pile of PE firms and celebrity Silicon Valley angels took it all. This is a rather new, post-Sarbanes-Oxley fact and it should make Americans very, very angry. When Microsoft when public in 1986, its market value was $780 million. Microsoft’s market value would rise more than 700 times in the next 13 years. Bill Gates made millionaires of thousands of ordinary public investors. When Google went public in 2004 at a $23 billion valuation, it left less on the table for you and me. Still, if you had invested in Google then and held your stock, you would be sitting atop a 9x return. Zuckerberg and his Facebook friends took it all.

4. Europe and May. Facebook’s shares debuted in a cloudy market. Beyond Europe in 2012, May is a bad time to go public. For the past several decades, nearly all of the stock market’s gains have occurred between October and May. The canard “Sell in May and go away” turns out to be true.

5. Facebook boredom, particularly among professionals. The company says it is zeroing in on a billion members. Good for Facebook, but what I would like to know is how many Facebook users have grown bored. I have not visited my Facebook page in two months. Almost every professional person I talk to who is over 25 years old has grown bored with Facebook.

6. Facebook is not necessary. Investing in tech companies is never easy. The great Warren Buffett eschews it. The key question about tech companies is not P/E values, but necessity. I like Google, Intel, Cisco, IBM, Oracle, EMC and SAP because the world’s economy depends on them. Sure, we could live without them, but not without major disruption. The switching costs would be extremely high. (I like Apple for an altogether different reason — the 80-20 rule; 20% of customers in any field will pay top dollar for a great product. Apple may be more of a luxury than it is integral to the global economy, but Apple monopolizes the luxury category.) Facebook is not integral to the global economy and its cool brand is rapidly fading.

7. Mass social media is a crock. It is an inherent contradiction. This is why I like LinkedIn more than Facebook. It has a special purpose and therefore doesn’t feel like a time waster. FWIW, I predict the next huge win in social media will be in health care. As a health care consumer, I want to chat with people who are just like me. With similar gene structures. Who suffer from similar maladies as well as the genetic potential for similar maladies. When linking up with my “health friends” I also want a 100% guarantee that my social network won’t betray my health confidences. Would I trust Facebook to keep these confidences? Never.

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A bust? How can you call Facebook’s IPO a bust when they sold a ton of stock at the price they were asking? If I were an insider, I would have been p****d had the stock shot up in initial trading, as that would have been proof that money had been left on the table. Isn’t the point of pricing a stock to find the price that people are willing to pay? Given that Facebook closed even on Friday, I would consider that to be a perfect match of buyer and seller.

While those buying into the IPO haven’t gotten a return (yet) on their investment, a two day measurement is a lousy time frame in which to evaluate an investment. Investors (should have) bought on the basis on what Facebook would do in the future, not what they would do in the next forty-eight hours. It is likewise silly to compare Facebook’s two day results to Microsoft’s and Google’s multi-year return on investment. Maybe Facebook stock will go up over the next months, maybe not. But it is just silly to declare it a bust – even from the perspective of those buying in – on the basis on two, or even three days of trading.

Sounds like a smashing success rather than bust. Zuckerberg and friends got to rip off all the sheep and run away with their money, right? Maddoff went to prison for ripping off far less. Zuckerberg will never spend a day in prison.

Very informative article. Facebook should remain popular with junior high kids. Its silly to be continually interrupted by the trivialities of virtual “friends.” Love your idea about a private healthcare information sharing and support network site.

3 out of 7 ain’t bad! Oh, wait, yes it is bad. Throw enough whatever at the wall and if half of it sticks? The hoody? The gratuitous and obviously incorrect jab at President Obama? Social media in healthcare? Do you even know what these words mean? Apple is a luxury? Sheesh!

The points focusing on how those managing the IPO mostly managed to help themselves to a healthy revenue stream… that’s all you need to know here. And thanks for pointing out that the sky is blue!

Excellent article. I agree especially with #3 I have been telling people that Facebook is a good stock just won’t give you a big return, so if you have extra money sitting around then put a small amount of that into Facebook, otherwise people like me with limited money stay away.

A couple of years ago, an established angel kept telling me I needed to get 20 somethings in my company and also go to Stanford to get them out of college. Well, I did try but the Stanford kids went the well funded companies or established companies I learned and pay vs. working for sweat.

I told the angel then I prefer guys with seasoning and experience in my industry with subject matter expertise vs. just college. He told me investors demand guys like the Facebook Founder.

Ben Graham was Warren Buffett’s professor and mentor. Buffett even named his son after Graham, and calls Graham his second greatest influence after his own father. Anahin gives a complete Graham analysis for all 4000 stocks listed on the NYSE, and more; including Facebook – http://www.anahin.net/stock/us/fb